What Happens To Unpaid Credit Card Debt If You Move Abroad? (2024)

Moving abroad is the kind of romantic adventure many dream about. Maybe you’ve been offered an exciting new job overseas, maybe you’re just looking for a fresh start in a new place. But if you are having some trouble making your credit card payments, that debt could get in the way of your plans. If you’re thinking of moving abroad, it’s important to know what will happen to your unpaid credit card debt.

In truth, your debt doesn’t magically disappear when you move, but debt collection does become more challenging for issuers if you leave the country. Because of each country’s unique credit systems and regulations, it can be difficult for creditors to track you down. This might make moving abroad seem like an attractive solution to avoiding debt repayment.

But ignoring your problems does not make them go away and your credit card issuer, debt buyer or debt collection agency will continue to make efforts to get you to pay as they normally would, which could lead to severe long term consequences.

How Will Your Credit Card Issuer Reclaim Your Credit Card Debts?

Credit issuers will normally carry out collection activities such as making collection calls and sending letters requesting payment once there is a default on a credit card debt. These collection activities often last for about 30 to 90 days after which they send the defaulted debt to a debt collection agency.

Collection agencies are knowledgeable about debt collection laws in various countries. Therefore, your credit card issuer will most likely hire a debt collector with a partner agency in the country you have moved to counter the limitation or non-existence of their rights to chase you for the debt you owe.

The debt collection agency will be hired under a contract for a set period, to send demand letters and call you to pay off your debt. If this collection agency is unsuccessful, your credit card issuer will assign your debt to another collection agency, and so on. So, you might have numerous collection agencies contacting you regarding your debt.

Even after many years, your credit card issuers might sell your defaulted debt to a debt buyer who would use any allowed tactics to get you to pay up. Debt buyers purchase thousands of defaulted accounts at discounted prices and may decide to offer favorable or not-so-favorable settlements. Bear in mind that when accounts get sold or transferred it can become quite complex and difficult to handle, so you might want to ensure it doesn’t come to this.

Why You Shouldn’t Move Abroad With Unpaid Credit Card Debt

Your Credit Score Will Be Affected

The biggest reason why people pay their credit card bills on time is to maintain a good credit score. Moving abroad with unpaid credit card debts may not look like a big deal, especially when you don’t have assets your credit card issuers can seize. Nonetheless, your credit score will negatively be affected by your inability to pay the debt. And on your return, you’ll be stuck with that impacted score.

Credit scores are almost irrelevant outside the United States, therefore, you will be starting a new credit history when you move to a new country. In most countries, you may not be able to acquire any kind of credit until you have lived there for a designated period of time. This means you might have to continue using your local credit card which may be difficult if you have large outstanding debts. Your bad credit score might make it difficult to start a new life in another country—you could need credit for things like securing a loan to buy a home or car.

You Will Have To Pay Taxes on Your Debt

At some point, you may no longer have creditors running after you to pay your credit card debts. This is because, after some time, your credit card issuer eventually writes off your debt. Once your debt has been written off, the IRS sees it as income which they expect you to file tax returns on and pay. For example, if you owe your credit card issuer some $20,000 and never pay, the IRS will regard this $20,000 as income that you are required to pay taxes on.

You Could Lose Your Passport

To get you to pay your taxes, the State Department may revoke your current passport, deny you a new one, or issue you a limited passport to make sure you come back. Since an IRS or State tax debt can lead to the suspension of your driver’s license and passport, it is important to know what type of debt you have before you start running from it.

Paying Your Debt Is the Right Thing To Do

There is no better way to avoid the unrelenting collection tactics creditors and other involved parties are willing to utilize than paying up your credit card debt. While you may be able to escape paying your debt by moving abroad, you expose yourself to financial problems that will come back to torment you.

Credit card debts can feel like a huge weight resting on your shoulders, but running away isn’t the smartest way to handle the situation. Simply because you’ve left the country doesn’t make the contract between you and your credit card issuer void. Your debts technically don’t disappear and you still have an obligation to clear them.

However, if your move abroad is genuine and you have been communicative with your credit card issuers, they will tend to be less aggressive when contacting you regarding your debt payment.

How To Manage Your Credit Card Debt Before Moving Abroad

Work With Your Credit Card Issuer

Credit card issuers are sometimes willing to negotiate payment terms or may offer a hardship program to debtors with good payment records. Try contacting your creditor to explain your situation and establish a repayment schedule. Working with your credit card issuers can provide relief during hard times and could result in more affordable interest rates or dismissed fees.

Consolidate Your Debts

Debt consolidation merges multiple debts into a single account. Rather than making separate payments each month to numerous credit card issuers, consolidation can lower your interest rates and help pay off your debts quicker. There are two ways you can consolidate your credit card, they are:

Personal Loans

A fixed-rate debt consolidation loan can be obtained to pay off your debts. Personal loans often have lower interest rates than credit cards and can help you save some money.

Credit Cards With Intro APR

Applying for a card with an intro APR period can help you save money on debt consolidation. These cards typically offer a 0% introductory period for around 12-18 months, but some offer longer periods. This can be crucial in paying down outstanding debt as it gives you a chance to tackle your debt directly without worrying about interest.

Use Payment Strategies

Payment strategies can be used to tackle credit card debts. This will keep you in check and help in resolving your debts quickly. You can decide to pay more than the 2% to 3% of the minimum monthly payment that is recommended by credit card issuers or automate your monthly payments to make sure that your debts are paid on time.

Because most banks make money through the interest rates they charge for each pay period, it will save you more money to make payments faster.

Bottom Line

Even though you have moved abroad, your credit card debts continue to exist. Therefore, it is always in your best interest to pay your debts before leaving the country or be open with your credit card issuers about why you’re moving abroad and when you’ll be making your payment. This will help you maintain a good credit score and secure your local assets.